Take off your shoes and get ready to smile before we criticize Meredith Whitney’s poor use of logic …

Remember 1999? Remember when almost every investment “pundit” said the economy would grow to the moon because increased stock wealth meant more spending power, which led to higher corporate profits, which led to more jobs, which led to more spending, ad infinitum?

Remember 2006? Remember when almost every investment “pundit” said the economy was in a new stage of First World growth because higher home prices meant more spending power, which led to higher corporate profits, which led to more jobs, which led to more spending, ad infinitum?

Well, now top financial services analyst Meredith Whitney is showing us the exact opposite feedback loop … and the logic is equally flawed.

If we follow this endless negative feedback loop, we end up in an economic dystopia where all commerce ceases and the entire economy collapses into one small heap of ether. Clearly, this is as absurd as following a positive feedback loop to an economic utopia where the material world continues to improve forever.

Although Whitney made a career-changing call with the Citigroup (NYSE:C) downgrade heard ’round the world, this isn’t the type of research that will keep her at the top of the game. But we will give her some serious props for one recent call: since we attended the CME Group’s (NASDAQ:CME) Global Financial Leadership Conference in October, munis are down almost 50% from when Whitney said she’d be a seller. Now that’s some logic we can appreciate.